Livestock Risk Protection (LRP)

Livestock Risk Protection (LRP) insurance is designed to insure against declining livestock market prices. It protects you when cattle or swine prices fall.  It provides a safety net protecting against livestock markets instability. 

When the CME final index number falls below the coverage selected, an indemnity is owed. Coverage amounts are determined by using the futures and options prices from the CME group. With a LRP contract, producers can pick the number of head they want to insure and the length as well as the coverage price of the contract.

LRP for Feeder Cattle provides coverage for Unborn Calves, Steers, Heifers, Dairy and Brahman.  The Weights available are Weight 1: under 600 pounds, and Weight 2: 600 to 1000 pounds. Your endorsement can be written to fit your operation and your expected shipping dates. With either Weight class, beef producers can select a coverage level between 70% to 100% of the Expected Ending Value and can insure their cattle in 4 week increments from 13 to 52 weeks. 

LRP for Fed Cattle provides coverage for heifers and steers expected to weigh 1,000 to 1,400 pounds by the end of the policy term. Beef producers can select a coverage level between 70% to 100% of the Expected Ending Value and can insure their cattle in 4 week increments from 13 to 52 weeks.  

A single SCE can insure up to 6,000 head at a time, with an annual maximum of 12,000 head split between multiple SCEs.   LRP-Fed Cattle premium is subsidized 35% for 95 - 100% coverage levels.

There is no up-front premium.  Premium is due the 30th of the month following the end of the endorsement.  LRP premiums are also subsidized.  For the 90% coverage level, growers only pay 65% of their total premium.  LRPs are cheaper than a Put and do not require margin accounts, margin calls or brokerage fees.  

Purchasing an LRP policy is a two-step process.  Initially, a one-time Application must be completed to determine eligibility. Once the RMA accepts the application, you can then purchase a Specific Coverage Endorsement (SCE) with your chosen livestock, coverage percent, and coverage length. Multiple SCEs can be purchased throughout the year under the initial Application.   A single SCE can insure up to 6,000 head at a time, with an annual maximum of 12,000 head split between multiple SCEs. 

Sales are only allowed after the Chicago Mercantile Exchange (CME) market closes.  SCEs can be written daily, between approximately 4:00 pm to 8:00 am MST following the close of the CME commodity futures/options trading.  Sales must be completed by 8:00 am MST the following day.  Call or text me to initiate your SCE. 

I send out an email of prices every afternoon as soon as I have access to them.  If you'd like added to my email list, please contact me.  

Call me at (406) 750-0257

This site provides only a summary of procedure.  Actual policy and procedure supersede this information.